GIAA and Lotte Agreement Mitigates Impact of Construction on Airport concessions
As reported by GIAA Executive Manager Tom Ada at the Board of Directors Meeting on January 31, 2019, the Antonio B. Won Pat International Airport Authority, Guam ("GIAA") has taken steps to mitigate the impact of the ongoing construction of the International Arrivals Corridor on the revenue and operations of Lotte Duty Free Guam ("Lotte"), which operates the retail concession at the Airport.
"The International Arrivals Corridor project is vital to the future of the Airport and when complete will enable us to move arriving passengers through Customs and security safely and rapidly in a state of the art facility," said Ada. "As is not uncommon with projects of this magnitude, there have been some major issues and the construction is causing significant disruptions in existing operations."
The completion date of the International Arrivals Corridor Project has been pushed back to July 2020 due to various unforeseen issues that were not anticipated during the course of the project. The cost of the project with potential change orders included may total approximately $130 million.
"Last April GIAA entered into a mediation agreement with Lotte to address anticipated construction impacts on the retail space and operations," noted Ada. “We recently updated that agreement with an Addendum, approved by the Board and signed on January 4, that provides for additional concessions in recognition of further construction impacts, including the closure of portions of Lotte's retail space for significant periods of time. As part of the Addendum, we also resolved a dispute that had arisen with Lotte about timely payment of GIAA's legal fees and reaffirmed our mutual commitment to the 2013 Concession Agreement."
"GIAA appreciates Lotte’s continuing commitment to the Airport and people of Guam as evidenced by the Addendum and willingness to work things out in the midst of construction and uncertainty arising from the lawsuits brought by DFS protesting the award of the Concession Agreement in 2013,” concluded Ada. "The Lotte Agreement is the best in the history of the Airport, so far generating more than $70 million in revenue, providing over $20 million in Airport improvements, and underpinning GIAA's $247 million bond issue which is funding the International Arrivals Corridor Project."